Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

113. Memorandum From William J. Jorden of the National Security Council Staff to the President’s Deputy Assistant for National Security Affairs (Haig)¹ ²

Washington, May 20, 1972

SUBJECT:

• Banzer’s plea for Direct Budgetary Help

You will want to take a hard and careful look at this one. Banzer called [text not declassified] The net of it is:

Bolivia is in deep economic trouble. The main problem is a grossly unbalanced budget. Banzer estimates the problem will continue until mid-1973. By then, he expects that increased petroleum output, a large cotton harvest, increased foreign investment, and other factors will have solved their worst troubles. In the interim, he desperately needs direct budget support to the tune of a minimum of $20 million this year and about $10 million for 1973. Without such help, Banzer said he would be forced to fire many public employees and devalue the peso. And these steps, he is certain, would lead to the downfall of his government.

[text not declassified] neither Ambassador Siracusa nor the State Department are aware of the above.

I think you will probably need to have a rump session of the 40 Committee—with Dick Helms and Jack Irwin or U. Alexis Johnson from State. I don’t see any direct Defense or JCS involvement in this one.

Of course, we want to help Banzer. If his Government collapses, God knows what we will get in its place. On the other hand, he has shown considerable lack of guts in facing up to his internal economic problems. Also, direct budget support has a tendency to turn into one big rat-hole. I would much prefer to see our assistance to him going into projects that produce jobs and improve the economic infrastructure. But I think he is going to have to face reality—particularly as regards setting his currency at a more realistic rate.

We probably should work up a package and ask Secretary Connally to sell it to Banzer if and when he visits La Paz.

Meantime, I will ask Hewitt to work up a report for you on just what we are doing in Bolivia currently. I will also have him make some discreet soundings—without any reference whatsoever to the above proposal—as to what we could do that would help Bolivia most if we decided to do more than we now are.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 770, Country Files, Latin America, Bolivia, Vol. 2, 1970–1974. Secret; Sensitive; Eyes Only. Sent for information; Outside the System. Haig wrote on the bottom of the memorandum, “Let’s get into regular channels—too much for black bag—see Kennedy and CIA Staff Liaison [illegible] Ratliff to see how we can move it.” Attached but not published at Tab A is a May 19 memorandum from Helms to Kissinger. On May 31, Haig informed Helms that Bánzer needed to make his request for assistance to the Embassy. (Ibid.)
2. Jorden argued that financial support for President Bánzer was important, but feared that direct financial support for the Government of Bolivia might get lost in the bureaucracy, and would not be immediately channeled into productive enterprises. Jorden informed Haig that he would ask National Security Council staff member Hewitt to come up with options for financial help for Bolivia if the U.S. Government decided to increase its assistance to the nation.